WASHINGTON, D.C. – Auto repossessions have risen beyond pre-pandemic levels, according to a recent report from the Consumer Financial Protection Bureau (CFPB), signaling growing risks for borrowers in the $1.64 trillion auto loan market. The analysis, covering data from major auto lenders between 2018 and 2022, revealed a troubling increase in repossession activity and costs for consumers, amplified by the expanding use of third-party forwarders.
“Supply chain shocks and higher interest rates drove up costs to purchase and finance a car,” said CFPB Director Rohit Chopra. “With outstanding auto loans exceeding a trillion dollars, it’s critical that borrowers can avoid the costly consequences of repossession.”
Key findings from the report include a 22.5% increase in repossession assignments. By December 2022, 0.75% of auto loans were assigned for repossession, compared to 0.61% in December 2019. The report also highlighted a shift toward using third-party forwarders, which rose from 31% in January 2018 to 66% by December 2022. Forwarder involvement typically resulted in higher fees for consumers.
For those whose vehicles were repossessed, financial burdens extended beyond the loss of transportation. Consumers still owed significant balances after lender auctions. The average remaining balance on repossessed vehicles grew from over $10,000 pre-pandemic to more than $11,000 by the end of 2022.
With over 100 million active auto finance accounts and $63 billion in new loans issued monthly as of April 2024, the CFPB’s findings underscore the mounting challenges faced by borrowers in an increasingly costly auto loan market. The report serves as a call to action for protecting consumers from the cascading financial consequences of repossession.
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